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Mail Service Costs Netflix 20x More Than Streaming
Jake writes "Netflix currently pays up to $1 per DVD mailed round trip, and the company mails about 2 million DVDs per day. By comparison, the company pays 5 cents to stream the same movie. In other words, the company pays 20 times more in postage per movie than it does in bandwidth. Doing some simple math, Netflix is spending some $700 million per year in physical disk postage. Rising content prices are offset by declining postage fees for the company, as more and more users choose the streaming-only option. Furthermore, subscriber revenues will continue to increase as Netflix increases the size of its streaming library."
I don't want to watch old movies or flops all the time.
Their streaming selection is ok for TV shows, but for movies it's fairly poor. This is no doubt directly due to the MPAA restricting what they can stream.
This article seems to be missing something important. How much does Netflix pay to the content provider for a license per movie played? Last I saw, estimates for most big players were something like $.50 to $.80 per view. For DVD's Netflix has to maintain a huge network of warehouses, staff, and buy replacements for what is broken, and the shipping, but in many cases that still seems to be cheaper than getting a license to stream the same film.
I tend to see that very popular movies (especially new releases) are not up for streaming.
You have to know that Netflix realizes they are saturating the internet, and perhaps they are doing us a favor by biting the bullet when it comes to paying a little more to ship... Maybe... I'd say they are one heck of a non conformist company if this is the case... But i'm going to say its pure laziness until I hear otherwise.
Yes, on a per-movie basis streaming is far cheaper but what's the difference in movies streamed per account versus movies rented via mail. I'd wager the average Netflix customer who doesn't stream consumes far fewer movies per month than the average streaming customer.
-- Adam McCormick
Content providers are at war with Netflix, and Netflix is differentiating Classes of Service depending on hardware used.
How I do I know? Same way you could know if you did the research. I have a Wii, a PS3 and Apple TV. Hook them up to a FastE hub, or a FastE switch that supports SPAN. Attach wireshark on a laptop.
Start the Netflix viewer on each device. Note that they each have different data centers that they reach out to. Always.
Traceroute to these IP addresses. Note that the Apple one in particular is congested at the last hop.
That is why the Netflix service sucks using the ATV2 unit.
So you have Netflix giving different hardware manufacturers different experiences - AND - you have bandwidth providers (mainly cable) trying to kill Netflix outright by rate shaping the traffic.
If I were Netflix, I wouldn't put those DVD burners on Ebay just yet...
SHAW and ROGERS are pushing hard to penalize people for using services like Netflix with their new caps and $1-2 per gig for going over. CRTC+SHAW+ROGERS+BELL= Consumer shafting FTW!
by TheSpoom (715771) Uncaring Linux user here. I have nothing to add to this but please continue. *munches popcorn*
pay for improvements to the backbone.
Linux distros and other filesharing will disappear by comparison.
This is the service that pays for the next internet upgrade.
I know I've gone from 28kbps up / 380kpbs down to 120kpbs (sometimes 180kpbs) up / 800kpbs down on comcast in houston.
The capacity is there.
I regret not getting Netflix sooner but they seem to have exploded recently-- at least 20 new series and a hundred new movies seem to be added weekly. I'm now 450 hours behind on viewing and I haven't even added Lost yet.
This is the "cable TV" killer. Cable TV will have to lower rates from $10 a month.
And Columbo from the 1980's is just as entertaining. Watched a great Danny Kaye film last night.
There is a huge oversupply of entertainment-- it's time for the prices to start coming down!
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
Since it uses 2 or so GB per HD movie streamed, your comcast caps will be pushed. The USPS hasn't called me up saying I have used too much mail.
Apple TV uses a bad setting for DNS by default. See here for a description of the problem and solutions.
It's not Netflix's fault, surprisingly enough.
To a Lisp hacker, XML is S-expressions in drag.
The post office is only struggling financially because of government mismanagement and involvement. The reality is that people don't mail stuff much any more, and as a result, having reliable mail service 6 out of 7 days of the week is economically not viable. However, even though the USPS is not taxpayer-funded (it's self-funded), and run as a separate business, they still have to get permission from Congress to make any big changes for some stupid reason.
The USPS has proposed cutting regular service to 5 or 4 days of the week. Most people wouldn't care: do you REALLY need to get that junk mail 6 days a week? (This wouldn't affect Express service, of course.) However, stupid Congress won't let them do it.
Cutting delivery service on Wednesdays alone would save them a ton of money and probably put them back into the black. People who really want service all 6 days can go buy a PO Box.
At any rate, I think Netflix's move to online distribution is going to dry up pretty soon, and they'll be forced to go back to mail service, because the US-based ISPs are all going to require Netflix to pay huge fees to stream movies, or else have their service blocked. The FCC is complicit in media consolidation and is opposed to network neutrality, so this is what we're going to see in the US very soon. The ISPs (esp. cable companies) have their own (shitty) movies-on-demand services, and they don't like the competition from Netflix.
Streaming isn't available to some of us. If Netflix drops the mail service, about all we can do is drop Netflix.
I really wonder if there is enough bandwidth to support all the streaming services proposed. I'm forced to think that the limitations on the amount of downloads to some subscribers may be a taste of the future. Streaming video such as that Netflix is trying to use may be dead on arrival. Repeat, may. I'm only speculating.
Yes, next they should drop that silly government-knows-better requirement of shipping to everyone, everywhere. All those rural farmers cost us far too much. To further increase profits, they should be allowed to discriminate the material you mail. I'm sure there's more money in NOT shipping the ACLU's mail than in shipping it, if you ask the right people. Then, finally, the market will be free and everyone should be better off.
Fleur de Sel
Yeah, it turns out that the founders of the country had rather peculiar ideas about mail. They thought the easy and reliable access to periodicals (ie, information) was essential to the continuation of democracy in America. Their was a raging debate early on between the pragmatists, who felt that newspapers should get deeply discounted mailing rates, and the idealists, who argued that newspapers should be able to use the US mail service for free.
They also argued that mail service should go to everyone, not just urbanites, for much the same reasons. Those inconvenient postal rules are a legacy of this passionate advocacy for free information.
This is all mostly forgotten today, but I wish it wasn't. The illustrative points about the utility of free exchange of information in a democracy. The illustrative lessons for last-mile broadband and an open Internet are so obvious I don't have to mention them.
If you ever want to hear a beautiful example of an employer and a union doing their best to screw each other over, listen to a post office employee for a while. Horribly management of the things they can change combined with union opposition to any change that could be more efficient (and therefore mean less workers).
The big question mark in reducing deliveries is whether it bumps the weekly workload for mailmen below 40 hours a week, at which point it becomes a very different kind of job.
"However, being required to do it 6/7 days is not. I don't think that was even required back then."
If 6/7 days is too much for you did you know they used to deliver three or four times a day in some major cities?
If Comcast has its way, the Internet will be pay-television.
You are welcome on my lawn.
They drop physical media, I drop Netflix and rely more on RedBox. I LIKE 1080P video, full 7.1 surround sound, and all of the other goodness I get from the physical media. I'm sorry it costs them more but this is what their business was founded on and while they make MORE profit from streaming they still make profit on me too. I even try to help them out by sending back disks in pairs to cut down on costs. They need to remember their core business...
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